28 June, 2019
India, in the field of Agriculture has been one of the world’s greatest producers, with highly efficient cropping and crop planning techniques India rules the Agricultural domain. However, a recent trend related to agriculture in India, that scares the economists worldwide is the decline of Tractor Industry in southern parts of India. Accounting to many reasons, Tractor Industry can be seen on the suffering part of the game and specifically in some parts of India. Whereas, the rest parts of the country continue experiencing great growth rates in the sale of tractors and other Farm Equipments.
This blog is a special coverage to account the reasons which can be held responsible for the decline and retardation in the sales of Tractor, specifically in South India.
Discontinuation of Subsidy
The factor that has hit the Tractor Industry majorly is the Discontinuation of Subsidy in the states of Southern India. Farmers who earlier used to avail the benefit of subsidies provided to them against a Loan and buying of Tractor and Farm Implements were discontinued, which further led to a decline in the sale of Tractors in the entire region.
This can be seen as a consequence of the poor political management and harsh climatic conditions in this region, which made it hard for public or private parties to offer such schemes.
Another reason that can be accounted for such a setback is the allocation of the funds for subsidies to other kinds of Farmer Loans and funds, which created a block of subsidies as the funds were used up.
Now this resulted in a major setback in the expectations of the farmers who planned their Cropping Pattern accordingly. This has not only impacted the lives of farmer but also the Tractor Industry to a very large extent. Due to sudden changes in the scheme plan, farmers left dumbstruck are now waiting for another sudden change which would induce subsidies back into the account and they would finally buy their dream machine.
This instability and not-so-fruitful expectations have delayed the process further along with declining the sales of tractors to an all time low.
In order to secure a positive outcome to this negative situation, a lot of planning along with administration support is required, which would first introduce lucrative schemes for the farmers and then bring the Tractor Industry to a level that it can be as competent as its counterpart in northern parts of the country.
Absence or lack of funds with the Dealers
Along with the vacuum of subsidies, another reason that has struck the Tractor Industry is the absence or lack of funds the dealers possessed. Such a condition can be seen as a consequence of other factors too, but has now been a major destruction to the set of Agricultural Values of Southern India.
Due to the lack of financial stability in the region, the dealers were left with a different kind of financial vacuum which supposedly made them face the risk of block in rotation of assets, which had hit the industry with a severe block of the funds.
As previously mentioned, harsh climatic conditions have been a bane to the entire Agriculture Industry. Similarly, Low Rainfall has been another reported cause for the decline of the tractor industry. Low Rainfall created it hard for the farmers to provide irrigation to their crops which resulted to a decrease in the overall cropped area, which had subsequently two reasons to result to the decline of industry.
First, the cost of irrigation increased which made farmers left with less funds for buying another product or say a liability in this case.
Second, with a decrease in the cropping area the use of tractor was minimized, since a low area could be ploughed and harvested with lower and less technical advanced equipments, this had hit the tractor industry hard.
Low Minimum Support Price
Southern India experiences comparatively low Minimum Support Prices for the crops as compared to the rest parts of the country; this might sound like a not-so-big reason for the decline of Tractor Industry, but when studied in addition to the above-mentioned reasons creates a huge impact upon a farmer.
Imagine a case where the overall cost of production has increased, no subsidies can be expected, the natural irrigation is low, the overall market is at the brink of collapse and a person then has to satisfy himself with a very low Minimum Support Price or in a more grieve condition cannot expect a fair price of the hard work and resources put in.
The nation during the Fiscal Year 18-19 observed an overall instability in the Political strata. With the election season going on and the related ongoing campaigns, the funds were concentrated to an entirely different domain which created a vacuum of funds in many regions. This is not the reason for decline of Tractor Industry alone, but of many industry that suffered a huge loss during this span. This reason is till unheard for the fact that it is hidden and major analysts refrain from talking about it or mentioning it. However, after the formation of the stable govt. this point is expected to be ratified.
Farming has been impacted with the decline of Tractor Industry in the Southern India; this is how the decline is not just a nightmare for an industry but the entire nation.
Prosperity of Farmer is directly related to the Mechanisation of his farm fields and when the process of mechanization slows down, the entire cropping pattern faces a huge impact.
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